Friday, 5 November 2010

On Hockeynomics and Gillardism

We are coming up to two months since the Gillard Government was sworn in, and so far they are looking pretty sick, looking unable to shake off the legacy of the Rudd Government's modus operandi and mistakes.

Still no narrative...

The Water debate has been completely mismanaged, and the prospect of any real reform looking pretty low at the moment.

A positive step on the asylum seekers side (releasing families with children into the community) could have been followed up by a skillful PR campaign.

The Government has a rare window at the moment to try and fundamentally turn around the asylum seeker debate, and try and change the ground for it before we go back to election mode and they get rolled over once more by Howard-esq popularism on this issue.

They could be out there telling the stories of some of the children involved, linking the asylum seekers on our shores to the persecution stories in Iraq and Afghanistan on the news each day which we all deplore. They could be out selling the case for a more humane approach to the whole issue. 

Instead the small positive step has been drowned out by the NIMBY debate on the location of  new detention centres.  And the impossibility of selling the idea of a regional processing centre to Malaysia, Indonesia (and East Timor).  And more and more boat arrivals...

Not to mention sound policy...

Then there is the banks debacle. Don't get me wrong, there obviously is a need for tougher regulation of the banks - I too am an aggrieved Commonwealth Bank customer!  But Mr Hockey's initial thought bubbles on the subject (like the thought bubbles on flat taxes) continue to undermine the Liberals' credibility.  And his nine point 'plan' looks more like a wishlist than a plan as such.

True, Labor deserves to be done over on this subject.  More than a year after the GFC, the personal indebtedness of Australians remains irresponsibly high, and the regulatory framework remains essentially unchanged.  Worse, the Rudd Government actually reduced competition by approving takeovers of St George (which contributed $685m to Westpac's profits this year) and BankWest (by the Commonwealth).  And Swan's repeated public exhortations to the banks on mortgage rates were just begging someone to call his bluff.

All the same, you must surely worry about the soundness of your supposedly conservative side-of-politics policies when your biggest supporters are the Greens and Get Up.!

Towards real policy

A real policy to tackle the problem of the banking sector would be far more radical than anything floated by Mr Hockey.  It would include consideration of options like:
  • breaking up the major banks into smaller components, using US style anti-trust measures;
  • pushing the banks out of the superannuation sector which they also dominate;
  • better support for the non-banking financial sector; and
  • stronger controls and incentive structures around personal debt levels. 
And it would look at means to manage the inflation pressures caused by the resources boom by means other than flattening the rest of the economy through the blunt instrument of high interest rates.

Don't expect to hear anything along these lines from either side however - we seem to be faced with a choice between popularism and inertia and a failure of the imagination. 

Oh for the days of a real reformer like PJ Keating.

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